Item No.:                  7a_supp_a 
Meeting Date:           January 13, 2015 
Aviation Division 
Capital Budget Update 
Briefing 
January 13, 2015 

1

Outline 
Methodology to evaluate financial and
airline cost impacts of changes to capital
program and plan of finance 
Update of 2015  2019 capital budget 
Financing of updated capital budget 
Next steps: Develop funding scenarios and
analyze implications for airport rates and
airline costs 
2

Funding Plan Update: Process 
Establish cost for IAF                 October 7 Budget presentation - cost of
IAF uncertain 
December/January cost of IAF = $608
December 2 briefing          million 

Today, will explain proposed changes to
Evaluate total capital and funding plan 
2015  2019 capital budget and airportwide
financial impacts 
January 13 briefing 
Funding allocation scenarios will permit
evaluation of rate impacts by cost center 
Present rate and airline cost impacts of funding         Use of PFCs to mitigate rate base
allocation scenarios                     impacts 
Will review with airlines prior to
commission presentation on January 27 
January 27 briefing 
3

Policy Issue In IAF Funding Plan 
Major policy issue: 
How does allocation of funding sources (e.g.,
PFCs) affect various rates and charges and,
thus, cost to airlines? 
Sea-Tac likely unique in USA: 
Airline agreement (2013  2017) requires all 
costs of IAF to be paid by users of FIS/IAF 
Other airports have far less rigid cost accounting and
rate requirements and/or explicit rate subsidies 
4

Funding Plan Update Process 
1. Overall Capital Budget changes 
Steps 1
and 2 will
2. Airport-wide plan of finance 
be covered
today 
3. Identify scenarios for allocation
of funding sources to cost centers 
Steps 3 -5
4. Calculate changes in rates (e.g.,              covered on
landing fee, terminal rents, FIS) 
January 27 
5. Calculate cost/impact for each
airline 
5

Capital Budget Changes 
2015 capital budget presentation (October 7): 
Cost estimate for IAF was preliminary  design not yet
underway 
Added 8 projects totaling $44 million 
Approval of 11 additional projects totaling $47 million put on
hold pending IAF cost update ("contingent projects") 
Goal of recent analysis was to absorb as much of
adjusted cost estimate of IAF as possible within existing
capital budget through project cuts, project savings,
deferrals and reduction of "Allowance" CIPs 
Airport has two Allowance CIPs within capital program that
accommodate future capital spending for currently
undesignated capital projects (either cost increases or new
projects) 
6

Projected Capital Increases 
Increased cost estimate
New Capital Needs ($000s)                for IAF to $608 million 
Internat'l Arrivals Facility - increase    264,000          Alaska Airlines' request
to add capacity for NSAT
NSAT Expansion - Bag System      14,400    baggage system 
B2 Expansion for Delta Club         13,200   Contingent projects (3
of 11): 
Central Terminal HVAC Upgrade       4,900      B2 building area is
preferred location for
Fire Dept. Truck                  1,450       new Delta Club 
Total                         297,950             "Inspansion" of terminal
requires HVAC upgrade 
New Fire truck needed
to replace older truck 


7

Projected Capital Cost Reductions 
Do only modest short-term fixes
Sources of Capital ($000s):
to SSAT; will require major
Cuts:
"SouthSTAR" project in future
SSAT HVAC, lights, ceiling         32,543
(2020+) 
Garage Vertical Conveyance         2,941
Other (3)                       2,507      HVAC improvements will be
Total Cuts                  37,990        done by other existing projects 
Savings:                              Recognizing savings on RON
Main Terminal HVAC Upgrades       7,875       hardstand project 
Aircraft RON Parking - USPS         5,000      Fewer homes to be insulated
Single Family Home Insulation        3,000        under old Part 150 program 
Other (8)                       6,400
Failure of Highline School
Total savings                22,275
District bond issue will delay
Deferred HSD Insulation            19,335
school noise mitigation projects 
Use of Allowance CIPs           154,350 
Allocate Allowances to known
Total                         233,951 
project increases 
8

Summary of Proposed Changes 
Capital Spending 2014 - 2019 ($000s)            Total spending up by 3.3% 
October 7, 2014 Presentation         1,926,206    Capital budget Allowances
Savings, cuts, use of allowances        (233,951)            at 29% of previous level,
New capital needs                 297,950           still provides flexibility 
Net increase                     63,999
Will replenish Allowances
Revised spending                1,990,205
with future savings: 
Realized project savings 
Balance of Allowance CIPs
Deferred spending 
Current balance                   217,529 
Proposed uses                 (154,350)             Project cuts 
Revised balance                  63,179

9

Breakout of Capital Budget Changes 
2014 - 2019 Spending
As of 10/7/14   As of 1/13/15   Change
IAF                 343,873      608,627   264,754
NSTAR           447,596    464,868   17,272
Baggage Optimization      229,287      229,687      400 
Runway 16C/34C         99,224          106,222    6,998
Other Projects            575,226      517,622    (57,604)
Allowances            231,000       63,179       (167,821)
Total     1,926,206      1,990,205     63,999

10

Financial Implications of Capital
Budget Changes 
Financial Implications
measured by comparison to peer
CPE    DPE
airports for: 
2013               11.90          141 
Cost per enplanement (CPE) 
Peer rank             10 of 22    11 of 19
Debt per enplanement (DPE) 
2015               11.79          130 
Forecasted high for CPE and
Forecast high - Current      15.27            151
DPE in targeted middle third of
Year of forecast high        2021       2018     peer ranking 
Peer rank            12 of 22    11 of 19    CPE and DPE have grown
Forecast high - Oct. 2014    14.63           144        moderately compared to
% Change since Oct. 2014   4.4%      5.1%    October 2014 forecast 
Forecast high in 2015 $     13.17           141       2021 CPE in constant dollars is
only 11.7% above 2015 (CAGR
of 1.9%) 
11

Debt Per Enplaned Passenger  
History and Forecast 
Projected
Debt/Enplaned Passenger                        high point in
$200
2018 ($151)
178
$180           175               173
172        173
165
160                    161                                                    well below
$160                      155        153            151 151
148
144
141                       143                    previous high
$140                                    136   135            137
130                                       130                       132
129                                                                       127           of $178 in
$120
2005 
$100    95
2
2018 high
$80
72                  0
0                                            point in 2015
$60                5
constant
$40
dollars = 141 
$20
$0
1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020   2021   2022   2023   2024                        12

Next Steps 
Identify and evaluate scenarios for allocation of funding
sources to cost centers (i.e., various allocations of PFCs
and other funding sources to IAF, other terminal, or
airfield projects) 
Calculate changes in rates (e.g., landing fee, terminal
rents, FIS rate) for each scenario 
Calculate cost/impact by airline 
Engage airlines in review of scenarios and impacts 
Return to commission with proposed funding allocation
plan on January 27 
Seek airline approval of budget increase for IAF through
majority-in-interest (MII) vote 

13

APPENDIX 

14

Future CPE  Comparison to Peer
Airports 
$35.00
SEA Future CPE in 2021
$30.00
CPE   Future CPE
$25.00

Targeted Middle Third
$20.00

$15.00

$10.00

$5.00

$0.00
15 
IAD JFK EWR ORD LAX MIA SFO SMF BOS LGA SEA DFW PDX DEN PHL SJC SAN IAH DTW MSP SLC PHX

Future Debt Per Enplanement  
Comparison to Peer Airports 
$400
Blue represents other airports in 2013
$350  343  340
Green represents SEA in 2018 (forecast
high point)
$300          293

249
$250
230
Targeted Middle Third
198
$200
170  166
151
$150
129
115  115  115
$100                                                      93   89   88   84
69
$50

0
$0
SJC  IAD  MIA  SMF  ORD  DFW  DEN  SFO  SEA  DTW  LAX  BOS  SAN  IAH  PHL  MSP  PDX  PHX  SLC      16 
2018

Debt Level  History and Forecast 
$3,500
Figures in $millions
Existing Debt   New Debt
$3,000


$2,500


$2,000


$1,500
2         2       2           2
0         0       0           0
0         1       1           2
$1,000                       5                0             4                   0


$500


$0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
17